In country X, the marginal rate of income tax charged on the top earners stood at 83%, and this rose to 98% when income came from interest or dividends. Later, the highest marginal rate was cut to 40%. Even with this cut, the tax revenue collected from the top earners rose sharply. Which theoretical concept shows this link between tax rates and tax revenue?
- Athe J curve
- Bthe Laffer curve
- Cthe Marshall-Lerner condition
- Dthe Phillips curve